The objective of this research is to develop a methodology of defining hospital markets using multiple market indicators and deriving appropriate market measures that can be used for studies of health care costs, productivity. and market forces. The uniqueness of my research will derive from its use of network analysis concepts to develop a methodology for defining organizational fields or markets. The method described-below has the following three desirable properties. l) It can utilize multiple indicators of market competition. Presently, hospital markets are defined using only one source of information, be it geographic location or patient flow data. This study proposes to use four indicators: patient flow data, geographic location, service duplication, and size difference. 2) It can define markets in hierarchically nested clusters which will help specify the degree to which each hospital is integrated to the competitive context of the market. 3) Network analysis provides several market-level measures that go beyond the simple count of hospitals in the market. They include various centrality and network density measures. Markets will be defined for all California community hospitals using the California Office of Health Facilities Hospital Disclosure and Discharge data, 1982-1989. Two empirical studies will be conducted l) to examine how sensitive market structure, boundary, and concentration rate are to hospital closures, conversions, or multi-hospital system affiliations, and 2) to examine the effect of market level measures like organizational and network density on hospital performance and failure. This study will contribute toward l) developing a methodology of defining more theoretically and substantively useful markets of hospital, 2) developing a general methodology of demarcating organizational fields, and 3) resolving the problem of boundary specification in network analysis. A well defined hospital markets will also be useful for understanding hospital market competition, problems of access to care for the indigent, the effect of various environmental variables on hospital performance, anti-trust implications of hospital mergers, and problems associated with health care reform and universal access to care.